PwC releases tax survey

FOR every N$2,88 profit that companies made, they paid Government N$1 in tax last year.

PricewaterhouseCoopers (PwC) surveyed 23 of the largest companies in Namibia. The outcome also shows that every N$1 paid as ‘tax borne’ means a further 67 cents in State coffers, which companies collect from consumers and workers, mainly as income and value-added tax (VAT).Taxes borne are taxes that have an immediate effect on company costs, such as tax on profit and property.The Total Tax Contribution Survey, the first of its kind in Namibia, was released on Monday night. It shows the growing importance of large companies to Government finances with the companies surveyed paying the Receiver a total of N$856 million in taxes borne last year, nearly 34 per cent more than in 2007. In addition, these companies collected N$577 million from consumers and employees on behalf of Government. This is about 12 per cent more than in the previous year. In total, these companies therefore paid nearly N$1,4 billion in tax in 2007.Included in the companies surveyed are NamPower, NamPost, the four commercial banks, some of the major insurance companies, MultiChoice Namibia, Namib Mills and some big players in the fishing industry.PwC Managing Director Albe Botha said the amount of corporate tax is coming under increased scrutiny and public debate.’The perception is that large companies are not paying their fair share in taxes and hence there is an increased tax burden on others, including individuals, to fund spending on social investments,’ he said.The average total tax rate for the 23 participating companies was 38,41 per cent last year, significantly higher than the 33,99 per cent in 2007. The survey contributes this increase partly to an increase in corporate tax of 44,39 per cent.Five companies each paid more than N$50 million in taxes borne. This represents 78 per cent of corporate tax paid by the participants.According to the survey, corporate tax forms the biggest part of tax borne by companies. Last year, corporate tax amounted to N$555 million, or 65 per cent of taxes borne by companies surveyed.Irrecoverable VAT totalled N$141 million (17 per cent), followed by customs duties of N$54 million, levies of N$48 million and stamp duties of N$52 million, all representing six per cent of the total taxes borne. Transfer duties were N$20 million and social security payments N$4 million.In total these ‘smaller’ business taxes totalled N$301 million. This means that for every N$1 of corporate tax paid, the 23 companies paid a further 54 cents in business taxes.The survey also compares the size and shape of the Namibia’s tax system to that of South Africa, the United Kingdom (UK) and Australia in 2007.Namibia has the least number of company taxes if one excludes industry-specific levies. Only 14 taxes are levied in Namibia, followed by 22 in the UK, 23 in South Africa and 55 in Australia. Locally, Government tax revenues represents 32,9 per cent of gross domestic product (GDP). In South Africa this figure is 27,7 per cent, in Australia 30,9 per cent and in the UK it stands at 37,4 per cent. Corporate tax as part of Government tax in Namibia is 13,6 per cent, followed by 27 per cent in Australia. The figure is lower in South Africa and the UK, and represents 6,3 per cent and 9,1 per cent respectively.jo-mare@namibian.com.na